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Article · International Journal of Energy Economics and Policy · May 18, 2022

The Effects of the Oil Price Shock on Inflation: The Case of Kazakhstan

Dinmukhamed Kelesbayev, Kundyz Myrzabekkyzy, Artur Bolganbayev, Sabit Baimaganbetov

Sabit Baimaganbetov
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Abstract

Increases in oil prices cause inflation. Interest rates are expected to decrease as a result of the expansionary monetary policies of the central banks in response to the indirect effect of increasing oil prices on inflation. Because an increase in oil price creates an additional foreign currency inflow to Kazakhstan, this leads to the appreciation of its national currency tenge. Therefore, this study uses monthly Brent Oil Price (OP), Consumer Price Index (CPI), and Real Effective Exchange Rate (REER) values for the period 2015:M1–2021:M11 to investigate the effect of oil price on inflation and real exchange rate in Kazakhstan. Analysis are performed using the Structural Vector Autoregression (SVAR) model. The results showed that while the Real Effective Exchange Rate mostly affects the Oil Price, the Consumer Price Index variable affects the Real Effective Exchange Rate.

Market Dynamics and VolatilityMonetary Policy and Economic ImpactEconomics of Agriculture and Food Marketsoil price shocksinflationreal effective exchange rate

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